Mining royalty will be increased to 10 percent

Coordinating Minister for the Economy Hatta Rajasa said that an increase in mining royalty from 1 percent to 10 percent is one of the five important aspects currently being negotiated with mining companies, Investor Daily reported on Wednesday.

?Royalty for the government will be increased from 1 percent to 10 percent,? Hatta said after giving a general lecture at the Padjadjaran University in Bandung on Tuesday. In addition to the royalty, the size of the mining areas is also being negotiated so that mining companies which dominate the use of land would return part of their areas to the government, Hatta said.

The mining companies should also divest a part of their ownership so that the government and local companies would have ownership of up to 50 percent, and the foreign miners with the remaining 50 percent.

He said that the renegotiations of the mining contracts were carried out in order to reduce the conflicts between mining companies in the local governments.

Meanwhile, the director general of coal and mineral at the Energy and Mineral Resources Ministry, Thamrin Sihite said that contract renegotiations with 14 mining companies had been concluded. The companies have all agreed on the six points being renegotiated with the government, he added.

The renegotiations with mining companies have taken place since early 2012 as part of the government?s plan to bring all existing mining policies in line with the new mining law.

The renegotiations covered six main issues namely the increase in royalty payments, the obligation to process mineral ores in Indonesia, the use of local goods and services, divestment, contract extensions, and the size of mining areas. (*)